UM DIGOS COLLEGE

ACADEMIC PLANNING AND SERVICES

Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
GENERAL INSTRUCTIONS: Select the best answer of the following questions. Do not write
anything in the questionnaire. Shade the corresponding circle of your choice.

An analysis of incomplete records of Kate Corporation revealed the following:

ACCOUNT INCREASES ACCOUNT DECREASES

Cash P 2,100,000 Equipment P 220,000
Accounts receivable 728,000 Advances to suppliers 140,000
Allowance for bad debts 85,000 Notes receivable trade 300,000
Inventory 329,000 Accounts payable 221,000
Prepaid insurance 120,000 Salaries payable 396,000
Advances from customers 250,000

Summary of cash transactions:

CASH RECEIPTS
Collections from customers
including the recoveries
of write off P 18,290,000
Interest on notes
receivable 120,000
Purchase returns 265,000

CASH DISBURSEMENTS
Payment to suppliers P 8,674,000
Sales returns 190,000
Insurance 390,000
Salaries 3,215,000
Equipment 900,000
Other expenses 605,000
Dividends 540,000

Other information:
a. Total purchase returns and allowances = P 455,000
b. Total sales returns and allowances= P 628,000
c. Bad debts written off during the year was P 220,000 while recoveries of previous
write-off account was P 90,000

Determine the following amount:

1. Net sales
a. 18,408,000 b. 18,278,000 c. 19,036,000 d. 18,598,000
2. Cost of sales
a. 8,328,000 b. 7,999,000 c. 7,859,000 d. 7,219,000
3. Bad debt expense
a. 305,000 b. 130,000 c. 215,000 d. 220,000
4. Depreciation expense
a. 220,000 b. 900,000 c. 1,120,000 d. 680,000
5. Net income
a. 5,000,000 b. 5,500,000 c. 5,200,000 d. 5,900,000

The information below was taken from the bank transfer schedule prepared during the audit
of BAY Co.’s financial statement for the year ended December 31, 2018. Assume all checks
are dated and issued on December 30, 2018.

Disbursement date Receipt date

Check no. From To Per books Per bank Per books Per bank
001 National Federal Dec. 30 Jan.4 Dec.30 Jan. 3
102 Country State Jan.3 Jan.2 Dec.30 Dec.31
203 Federal American Dec. 31 Jan.3 Jan.2 Jan. 2
304 State Republic Jan. 2 Jan.2 Jan.2 Dec.31

6. Which of the above checks might indicate kiting?

Page 1 of 10
 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
a. #001 and #203
b. #102 and #304
c. #001 and #304
d. #102 and #203
7. Which of the following cash transfers result in a misstatement of cash at December 31,
2018?
Disbursement Receipts
Recorded in Paid by Recorded in Received by
books bank books bank
a. 12/31/18 01/04/19 12/31/18 12/31/19
b. 01/04/19 01/05/19 12/31/18 12/31/18
c. 12/31/18 01/05/19 12/31/18 01/04/19
d. 01/04/19 01/11/19 01/04/19 01/04/19

You conducted a surprise count for the petty cash account of Jess Inc. on June 30, 2018.
The following information are noted:
a. Petty cash fund, imprest balance- P 120,000, Cash in bank- P 1,631,730
b. Summary of cash count
Currencies and coins P 37,620
Disbursement check payable to the 46,800
custodian
Officer’s personal check 12,000
accommodated by the fund
Manager’s check marked NSF 6,000
Petty cash expense vouchers:
6/20 Transportation 4,500
6/24 Office repairs 2,700
6/27 Miscellaneous 6,300
Unused postage stamps 1,500
Enveloped marked “X-MAS FUND” with 7,500
list of names and corresponding
amount contributed. There is no
money inside the envelope

c. The May Bank reconciliation statement included the following:

Balance per GL P 980,490
N/R collected by the bank 375,000
Interest on N/R 37,500
Service Charge (16,800)
Customer NSF Check (75,000)
Adjusted balance P 1,301,190

Balance per bank P 1,402,500

Deposit in transit 167,370
Outstanding Checks (295,380)
Bank error 26,700
Adjusted balance P 1,301,190

The May book reconciling items were recorded in the books in June while the bank charge
error in May was automatically corrected by the bank in June. The bank collected another
P 300,000 N/R in June with a P 30,000 interest on the company’s behalf. Bank service
charge for December was P 24,300. The company erroneously recorded a disbursement check
amounting to P 168,000 as P 195,000 in June. The error is yet to be corrected. The bank
erroneously credited the company P 63,000 for a deposit of Jessie Inc. The bank
discovered and corrected the error in June.

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 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
Total bank credit and debits appearing in June bank statement were P 8,011,800 and P
7,325,760 respectively. Moreover, total receipts per GL was P 7,977,330.

8. What is the petty cash shortage as of June 30, 2018?

a. 11,580 b. 4,080 c. 10,080 d. 17,580
9. What is the June deposit in transit?
a. 140,100 b. 77,100 c. 113,400 d. 167,100
10. What is the June outstanding checks?
a. 264,210 b. 201,210 d. 290,910 d. 291,210
11. What is the correct balance of cash in bank as of June 30, 2016?
a. 1,964,430 b. 1,911,030 c. 1,946,430 d. 1,901,430

Anthony Corp.’s general ledger showed the following:

Accounts receivable P 550,000
Allowance for doubtful accounts (debit) 16,500

The subsidiary ledger on the other hand shows the following composition:
Customer Invoice date Invoice Amount Balance
A 12/06/18 42,000
11/29/18 63,540 P 105,540

B 9/27/18 36,000
8/20/18 26,720 62,760

C 12/30/18 20,000
12/08/18 40,000
10/25/18 31,800 91,800

D 11/17/18 69,420
10/09/18 66,000 135,420

E 12/12/18 57,600
37,200 94,800

F 9/12/18 52,200 52,200

You noted the following:

a. The account receivables balances were confirmed with the customers, except the
following:

Customer Balance Remarks

per reply
B P 36,000 Invoice dated 8/20/18 was already
settled. Investigation revealed that
B’s payment was erroneously posted
against E’s account for an invoice
dated 12/20/18 for the same amount.
C 71,800 The difference was due to invoice
dated 12/30/18. Good have not been
received by C, yet as of 12/31/18.
Term of sale: FOB Destination
E 121,560 “Amount per our records appear
higher, please check.”
F No reply E was judicially declared insolvent
and the amount is deemed definitely
uncollectible.

b. Company policy are summarized below:

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 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
Age (days) % Collectible
0-30 99
31-60 98
61-90 95
91-120 90
Over 120 50

12. What is the correct allowance for bad debts as of December 31, 2018?
a. 31,413 b. 44,525 c. 31,613 d. 44,725

13. What is the correct amortized cost of accounts receivable as of December 31, 2018?
a. 438,907 b. 458,707 c.457,807 d. 470,320

14. What is the correct bad debt expense for the year>
a. 100,113 b. 67,113 c. 113,225 d. 100,313

15. What is the entry to record the difference between the general ledger and the
subsidiary ledger?
a. Sales 7,480
Accounts receivable 7,480
b. Bad debts expense 7,480
Accounts receivable 7,480
c. Allowance for bad debts 7,480
Accounts receivable 7,480
d. No entry

Jeaneth Company is a manufacturer of small tools. The following information was obtained
from the company’s accounting records for the year ended December 31, 2018. For each of the
numbered items, determine the amount if any, that should be reported as current liability
in the balance sheet.

16. The Accounts payable ledger showed a balance of P 1,415,000. Inventory at December
31, 2018 (based on physical count in Jeaneth’s warehouse at cost on December 31,
2018) was P1,870,000. Your audit reveals the following information:
 The physical count included tools to be shipped to a customer FOB shipping point
on December 31, 2018. These tools cost P64,000 and were billed at P78,500 and were
recorded as December sales. They were physically segregated awaiting shipping
instructions from the customer.
 Goods shipped FOB shipping point by a vendor were in transit on December 31, 2018.
These invoice amounting to P93,000 were received in January 2019 and were recorded
as purchases upon receipt.
 Work in process inventory costing P27,000 was sent to a job contractor for further
processing.
 Not included in the physical count were goods returned by customers on December
31, 2018. These goods costing P49,000 were inspected and returned to inventory on
January 7, 2019. Credit memos for P67,800 were issued to the customers at that
date.
 In transit to a customer on December 31, 2018, were goods costing P17,000 shipped
FOB destination on December 26, 2018. A sales invoice for P29,400 was issued on
January 3, 2019, when Jeaneth Company was notified by a customer that the tools
had been received.
 At exactly 5:00 pm on December 31, 2018, goods costing P31,200 were received from
a vendor. These were recorded on a receiving report dated January 2, 2019. The
related invoice was recorded on December 31, 2018, but the goods were not included
in the physical count.
 Included in the physical count were goods received from a vendor on December 27,
2018. However, the related invoice for P36,000 was not recorded because the
accounting department’s copy of the receiving report was lost.

Page 4 of 10
 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
 A monthly freight bill for P16,000 was received on January 3, 2019. It
specifically related to merchandise bought in December 31, 2018, one-half of which
was still in the inventory at: December 31, 2018. The freight was not included in
either the inventory or in accounts payable at December 31, 2018.

a. 1,552,000 b. 1,560,000 c. 1,467,000 d. 2,078,200

17. Items related to Jeaneth Company’s payroll as of December 31, 2018 are:
Accrued salaries and wages P 776,000
Payroll deductions for:
Income taxes withheld 56,000
SSS contributions 64,000
Philhealth contributions 16,000
Advances to employees 80,000

a. 776,000 b. 992,000 c. 832,000 d.912,000

18. In May 2018, Jeaneth Company became involved in a litigation. The suit is being contested,
but lawyer believes it is possible that the company may be held liable for damages
estimated in the range between P2,000,000 and P3,000,000, and no amount is a better
estimate of potential liability than any other amount.
a. 0 b. 2,000,000 c. 3,000,000 d. 2,500,000

19. During 2018, Jeaneth Company entered in a noncancellable commitment to purchase 320,000
units of inventory at fixed price of P5 per unit, delivery to be made in 2019. On December
31, 2018, the purchase price of this inventory item had fallen to P4.40 per unit. The
goods covered by the purchase contract were delivered on January 28, 2019.
a. 0 b. 1,600,000 c. 1,408,000 d. 192,000

20. On December 31, 2018, Jeaneth Company’s deferred income tax account has a 2018 ending
credit balance of P772,800, consisting of the following items:
Caused by temporary differences in accounting Deferred tax
For gross profit on installment sales P 376,000 Cr.
For depreciation on property and equipment 576,000 Cr
For product warranty expense 179,200 Dr
P 772,800 Cr.
b. 772,800 b. 952,000 c. 196,800 d. 0

21. To increase sales, Jeaneth Company Company inaugurated a promotional campaign on June 30,
2018. Jeaneth Company placed a coupon redeemable for a premium in each package of product
sold. Each premium costs P100. A premium is offered to customers who send in 5 coupons
and a remittance of P30. The distribution cost per premium is P20. Jeaneth Company
estimated that only 60% of the coupons issued will be redeemed. For the six months ended
December 31, 2018, the following is available:

Packages of product sold 160,000

Premiums purchased 16,000
Coupons redeemed 64,000
a. 1,728,000 b. 1,152,000 c. 1,600,000 d. 576,000

22. Jeaneth Company has a one year product warranty on selected items in its product line.
The estimated warranty liability on sales made during 2017, which was outstanding as of
December 31, 2017, amounted to P416,000. The warranty costs on sales made in 2018 are
estimated at P1,504,000. Actual warranty costs incurred during the current 2018 fiscal
year are as follows:
Warranty claims honored on 2017 sales P 416,000
Warranty claims honored on 2018 sales 992,000
Total warranty claims honored P 1,408,000
a. P0 b. P1,504,000 c. P96,000 d. P512,000

Pearl Corporation uses the lower of cost or net realizable value inventory. Data regarding
the company’s inventories are as follows:

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 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20

The General ledger showed the following balances:

Cost: Finished goods P 1,430,000
Work in process 748,000
Raw materials 2,875,000
Allowance: Finished goods (10,000)
Raw materials (40,000)

The cost accountant provided the following information:

Finished Goods Item M Item P Item Q
Cost P 550,000 P 540,000 P 430,000
Selling price 675,000 620,000 820,000
Estimated cost to sell 20% 15% 15%
(as % of sales)

Work in Process
Cost of raw materials to date 120,000 88,000 200,000
Cost of direct labor to date 70,000 60,000 80,000
Cost of factory overhead to date 50,000 40,000 40,000
Selling price upon completion 360,000 289,000 735,000
Estimated cost to complete 48,000 97,650 74,000
Replacement cost 208,000 168,000 375,000
Normal profit margin 25% 35% 40%
(as % of selling price)

Raw Materials- Item M A B C

Cost 250,000 500,000 400,000
Current Purchase price 250,000 480,000 375,000

Raw Materials- Item P X Y Z

Cost 400,000 300,000 200,000
Current Purchase price 450,000 275,000 180,000

Raw Materials- Item Q D E

Cost 375,000 450,000
Current Purchase price 395,000 420,000

23. What is the correct Finished Goods inventory to be reported in the Statement of
Financial Position as of December 31?
a. 1,497,000 b. 1,530,750 c. 1,466,000 d. 1,520,000
24. What is the correct Work in Process inventory to be reported in the Statement of
Financial Position as of December 31?
a. 708,000 b. 746,420 c. 650,200 d. 748,000
25. What is the total raw material to be reported in the Statement of Financial Position
as of December 31?
a. 2,785,000 b. 2,875,000 c. 2,765,000 d. 2,775,000
26. What is the total loss on inventory write-down to be reported for the period?
a. 103,00 b. 113,000 c. 143,000 d. 153,000

On May 31, 2018, a fire completely destroyed the work-in process inventory of Charles
Paints. Physical inventory figures were published as follows:

As of January 1, 2018 As of May 31, 2018

Raw Materials P 15,000 P 30,000
Work- in Process 50,000 --
Finished Goods 70,000 60,000

Sales for the first five months of 2018 were P150,000. Raw materials purchased were
P50,000. Freight on purchases was P5,000. Direct labor for the five months was P40,000. To
determine the value of the lost inventory, the insurance adjusters have agreed to use an

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 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
average gross profit rate of 32.5%. Assume that manufacturing overhead was 45% of direct
labor cost.

27. The value of the goods manufactured and completed as of May 31, 2018 was
a. P60,000 c. P95,000
b. P90,000 d. P91,250
28. Raw materials used during the first five months of 2018 were
a. P25,000 c. P40,000
b. P35,000 d. P45,000
29. The total value of goods put in process during the five-month period amounted to
a. P143,000 c. P168,000
b. P150,000 d. P148,000
30. The value of the destroyed work-in process inventory as determined by the insurance
adjusters would be
a. P56,750 c. P86,750
b. P65,750 d. P57,650

Liezel Investments had the following portfolio of financial assets as of December 31, 2018.
All of which were acquired in 2018:
Acquisition cost
KAPA stocks, 20,000 shares P 590,000
Rigen stocks, 40,000 shares 1,100,000
ALMAMICO, 10%, P 2M bonds 1,973,000
Everarm stocks, 50,000 shares 2,400,000

a. KAPA shares were acquired with an intention of generating short term profits from the
share price fluctuation. The company paid P 29.50/ share, which included the P 0.50/
share broker’s fees and commissions. These shares were acquired on February 20, 2018.
A P 2 per share cash dividends were received on March 30. These dividend were
declared by KAPA on January 20,2018 to shareholders as of record date March 1, 2018.
b. The company paid P 27.50/ share, including P 0.50/ share brokers’ fee on the
acquisition of Rigen Inc. on March 1, 2018. These shares were acquired for trading
purposes. A P 3 per share dividends were received from the said shares on May 3,
2018. These dividends were declared on April 1 to shareholders as of record date
April 20.
c. ALMAMICO Bonds which pay semi-annual interest every June 30 and December 31, were
acquired on October 1, 2018 at P 1,973,000, when the prevailing effective interest
rate on similar instrument was at 12%. The bonds mature on December 31, 2020. The
company has a business model of holding debt securities for short term profits.
d. Everarm shares were acquired P 48/share, including P 3/share brokers’ fees and
commissions on June 30, 2018. Everarm had a total of 200,000 shares outstanding on
the same date. The company received P 5/ share dividends from Everarm on December 20,
2018.
e. The following information were deemed relevant at yearend and no entries was made yet
to reflect any of the following:

KAPA Rigen ALMAMICO Everarm

Net income, 2018 P 1,200,000 P 1,500,000 P 2,000,000 P 2,240,000
Fair value 35/ share 25/ share 11% 51/ share

31. What is the unrealized holding gain or loss to be reported in the 2018 statement of
comprehensive income?
a. 121,948 b. 51,948 c. 1,948 d. 122,750
32. What is the carrying value of Everarm shares that should be presented in the 2018
Statement of Financial Position?
a. 2,430,000 b. 2,150,000 c. 2,280,000 d. 2,550,000
33. Assuming that the company’s business model regarding debt securities has an objective
of collecting contractual cash flows, what is the correct carrying value of ALMAMICO
shares that should be presented in the 2018 Statement of Financial Position?

Page 7 of 10
 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
a. 1,930,690 b. 1,932,690 c. 1,965,750 d. 1,960,960

On January 1, 2018, April Corp. acquired 30,000 shares of KAPA Corp’s 100,000 shares
outstanding for P 5,000,000. The book value of KAPA’s identifiable net assets on this date
was at P 14M. All of its carrying value approximated their fair value except for a depreciable
asset with a remaining life of 5 years, which was undervalued on this date by P 1.6M.

KAPA reported total comprehensive income in 2018 at P 4,000,000 which was net of foreign
exchange loss reported as other comprehensive loss at P 800,000. KAPA also paid dividends at
P 1,500,000 at the end of the year, P 500,000 of which is from pre-acquisition Retained
Earnings. The fair market value of shares on this date was P 210/ share.
34. What is the carrying value of April’s investment in KAPA as of December 31, 2018
using the appropriate accounting standards?
a. 5,990,000 b. 5,750,000 c. 5,654,000 d. 5,894,000
35. Assuming that April sold 18,000 shares of its KAPA shares on December 31, 2018 at its
prevailing fair value, how much should be recognized in the profit of loss as a
result of the transaction?
a. 646,000 b. 406,000 c. 387,600 d. 243,600
36. Using the information in the previous item, how much shall be the carrying value of
any remaining investments as of December 31, 2018?
a. 2,261,600 b. 2,357,600 c. 2,300,000 d. 2,520,000

Ayves Company has the following non-trade equity securities on December 31, 2017
# of Shares Cost Fair value (12/31/17)
Dodo ordinary shares 9,000 P 441,000 P 46/share
Didi ordinary shares 30,000 1,080,000 35/share
Marc preference shares 2,400 360,000 154/ share

The following were discovered:

a. The above securities were all bought in 2017. On the initial recognition, Ayves Corp.
made an irrevocable election to present gain/loss on the said securities to other
comprehensive income.
b. On April 1 2018, the company sold all Dodo shares for P 65/share.
c. On May 1, 2018, the company purchased 4,200 ordinary shares of Josef Corp. at P 77/
share. The company incurred brokers’ fees amounting to P 10,400. A P 2/share
dividends was received on June 15. Upon further inquiry, the dividends were declared
by Josef Corp. in April 15 to shareholders as of record date, May 15.
d. The following additional information are deemed relevant:

Dividends Declared* Reported Net Income Fair value (12/31/2018)

Dodo ordinary shares P 2.00/share P 900,000 P 62/share
Didi ordinary shares 1.50/share 1,300,000 38/share
Marc preference shares 1.00/share 750,000 145/ share
*Dividends were declared on December 31, 2018

37. What is the realized gain on sale to be reported in profit of loss of Dodo shares in
2019?
a. 190,000 b. 171,000 c. 144,000 d. none
38. How much should the investment in Josef Corp. be initially recognized at?
a. 333,800 b. 325,400 c. 315,000 d. 323,400
39. What is the unrealized holding gain/loss to be reported in the equity portion of the
2018 Statement of Financial Position?
a. 56,400 b. 46,000 c. 66,400 d. 76,800
40. Assuming Ayves Company elected to report gain/ losses in profit or loss instead, what
is the unrealized holding gain/loss to be reported in the 2018 Statement of
Comprehensive Income?
a. 56,400 b. 46,000 c. 66,400 d. 76,800

Rosella Company had several transactions during 2017 and 2018 concerning Plant assets. Several
of these transactions are described below, followed by the entry or entries made by the
company's accountant.

Page 8 of 10
 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20

Equipment:
Several used items were acquired on February 1,2017, by using a P100, 000 noninterest-bearing
note. The note is due one year from the date of issuance. No market value of the note or the
equipment is available. Rosella's most recent borrowing rate was 8%.

Feb. 1, 2017 Equipment 100,000

Notes Payable 100,000

December 31, 2017 Depreciation Expense 10,000

Accumulated Depreciation-Equipment 10,000
Buildings:
A building was acquired on June 1,2017, by issuing 100,000 shares of the company's P5 par
value ordinary shares. The ordinary share is not widely traded; therefore, no market price
is available. The building was appraised on the transaction date at P650,000.

June 1, 2017 Building 500,000

Ordinary Share (100,000 X 5) 500,000

December 31, 2017 Depreciation Expense 10,000

Accumulated Depreciation-Equipment 10,000
Inventory/Fixtures
Inventory and display fixtures were acquired for P125,000 cash on April 1, 2018, from a
competitor who has liquidating her business. The estimated value of the inventory was
P85,000 and the value of the fixtures was P55,000.

April 1, 2018 Inventory 85,000

Display Fixtures 55,000
Cash 125,000
Gain on Acquisition of
Inventory and Fixtures 15,000
Land:
Land was donated to Rosella by the City of Cagayan in September 2018 as an inducement to
build a facility there. Plans call for construction at an undetermined future date. The
land was appraised at P48,500. No entry was made.

Machinery:
Machinery was acquired on October 12 in an exchange for a similar equipment appraised at
P45, 000 on the date of the exchange. Rosella received machinery valued at P40,000 and
P5,000 in cash in the transaction. The exchange is considered with commercial substance.

October 12, 2017 Machinery 45,000

Cash 5,000
Accumulated Depreciation-Machinery 16,000
Machinery 52,500
Gain on Exchange of Machinery 13,500

December 31, 2017 Depreciation Expense 4,500

Accumulate Depreciation- Machinery 4,500
Additional information:
Rosella uses straight-line depreciation, applied to all assets as follows:
1. A full year's depreciation taken in the year acquisition and no depreciation taken in
the year of disposal.
2. Estimated life: 25 years for buildings; 10 years on all other assets (no salvage values
are assumed.)

Compute the net adjustments to the following account balances as of December 31, 2018:
a b c d
41. Equipment 1,358 16,666 7,407 6,049
42. Buildings 156,000 144,000 124,000 150,000
43. Fixtures 5,893 15,000 9,107 10,089
44. Land 48,500 50,000 98,500 38,500

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 UM DIGOS COLLEGE
ACADEMIC PLANNING AND SERVICES
Course Name: Periodical Examination No.: Term: 2nd
Course Code: Date of Examination: Sem: 1st
Instructor: Total Number of Items: SY: 19-20
45. Machinery 6,800 5,000 7,556 10,800

The shareholder’s equity section of DAE Company’s statement of financial position as of

December 31, 2018, is as follows:
Ordinary Shares, Php 10.00 par value; authorized,
2,000,000 shares; issued 400,000 shares P 4,000,000.00
Preference shares, Php 5.00 par value; authorized,
1,000,000 shares; issued 200,000 1,000,000.00
Share premium- Ordinary shares 1,800,000.00
Share premium- Preference shares 600,000.00
Retained Earnings 6,000,000.00
Total P 13,400,000.00

The following transactions occurred during 2019:

Jan. 5 The company issued for Php 2,350,000.00, 100,000 ordinary shares and 50,000
preference shares. The company incurred share issue cost at Php 150,000.
The ordinary shares were currently selling at Php 15.00 per share while
the preference shares at Php 10.00.
Feb. 16 50,000 preference shares were subscribed at Php 12.00 per share.
Mar. 25 20,000 previously unissued ordinary shares were issued in exchange of an
equipment having a fair market value of Php 500,000. The company incurred
share issue costs at Php 20,000.00
Apr. 20 Reacquired 40,000 ordinary shares as treasury shares at Php 18.00 per
share.
Jun. 30 The company declared and paid Php 0.50 cash dividends to ordinary shares
and Php 1.00 per share cash dividends to preference shares.
Aug. 30 A 10% ordinary stock dividend was declared and issued to ordinary shares.
Market value is currently at Php 17.00 per share.
Sept. 16 Collected full payments on 80% of the preference shares subscribed on
February 16.
Dec. 31 The company declared and paid Php 0.50 cash dividends to ordinary shares
and Php 1.00 per share cash dividends to preference shares.
Dec. 31 Adjusted net income for the year is at Php 3,510,000.00

46. The entry to record cash dividends on June 30 requires a debit to retained earnings
at:
a. 560,000 b. 540,000 c. 575,000 d. 585,000
47. The entry to record the reissue treasury shares on July 30 a requires a debit to:
a. Share premium Php 40,000.00
b. Retained earnings Php 40,000.00
c. Share premium Php 80,000.00
d. Retained earnings Php 80,000.00
48. The entry to record the stock dividends on August 30 requires a debit to retained
earnings at:
a. 500,000 b. 540,000 c. 850,000 d. 918,000
49. What is the balance of the share premium in excess over par from ordinary shares at
December 31, 2019?
a. 3,040,000 b. 3,152,500 c. 2,842,500 d. 2,750,000
50. What is the balance of the Retained earnings- unappropriated as of December 31, 2019?
a. 7,346,000 b. 7,645,000 c. 7,103,000 d. 7,145,000

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